Marketing the New Venture 207Jim Buckmaster:
The Business of Making Less Money
He’s the President, Chief Executive Officer
and Chief Financial Officer of the seventh
most popular English-language site on the
Internet. His Web site posts ten million clas-
sified ads and has more than four billion esti-
mated page views every month, but most
users pay absolutely nothing. The company
incorporated as a for-profit organization in
1999 and collected $25 million in fees during
- Most analysts believe Craigslist
(www.craigslist.com) could easily rake in
$500 million a year if Jim Buckmaster wanted
it to.
But it’s service, not profit that drives the
company. To the chagrin of entrepreneurs
struggling to make as much money as they
can, Buckmaster seems content to profit from
only a small segment of the classified ads on
Craigslist. He says that unlike other sites,
“Our primary mindset is philanthropic—to
offer what we see as a public service.”
Craigslist was founded in 1995 by Craig
Newmark, a software engineer who launched
it on his home PC as a noncommercial com-
munity bulletin board for the San Francisco
area. Buckmaster’s experience with the site
was limited to finding an apartment and sell-
ing a futon until the computer programmer
listed his résumé on Craigslist and Newmark
offered him a job. As the site’s lead program-
mer and Chief Technical Officer, Buckmaster
took the venture to a multiserver operation,
expanded its community to multiple cities and
countries, and added features like a search
engine and discussion forums.
Craigslist currently charges for job post-
ings in the San Francisco area, charges
slightly less for jobs listed in the New York
and Los Angeles areas, and even less for
housing listed by brokers in New York City.
“We’re much more comfortable charging
companies than charging individuals,”
explains Buckmaster. “Businesses are better
equipped to afford a small fee and business-
es can pay for fees out of pre-tax dollars
where on average users are less able to pay
a fee and they have to pay in post-tax dol-
lars.”
Buckmaster has an answer for those who
criticize Craigslist’s disinterest in maximizing
revenues: “In the big Internet boom, thou-
sands of companies were set up,” he says.
“With the exception of us, pretty much all of
them were set up with the primary objective
being to make a lot of money. Almost all of
those businesses went under and never
made any money. Even businesses like
Amazon still haven’t made any money. They
are still, over their entire lifetime, net nega-
tive. Here we are—we’ve been in the black
since 1999.” Because Craigslist has few
outside investors (although eBay purchased
a minority stake in 2004), it is not under pres-
sure to produce growth at any cost. Its
growth has been organic—occurring only
when the company and its market were
ready.
One thing that keeps Craigslist in the
black is its use of no-cost open-source soft-
ware. The Web site has an unsophisticated
appearance, but that doesn’t keep it from
being effective. Another strength is its low
labor cost: Because users do most of the
postings and much of the policing of the site,
the company employs only 21 people.
Buckmaster notes that today “there are
more and more businesses where huge
amounts of value can flow to the user for
free. I like the idea, just as an end-user, of
there being as many businesses like that asPERSONAL PROFILE 6